The current gold standard for bone graft material is autologous bone graft, but autologous grafts are limited by availability and donor site morbidity. Various osteoinductive growth factor-based therapies have been developed in an attempt to find an effective and safer method of bone regeneration. Among the various osteoinductive factors available, bone morphogenetic proteins (BMPs) are believed to be the most potent osteoinductive factors and have been extensively studied for the treatment of many bone fractures and bone defects. However, BMPs are highly pleiotropic molecules and their supra-physiological dose requirement leads to adverse side effects such as cyst formation, and inefficient bone formation. Thus, there is a need to develop alternative osteoinductive growth factor strategies that can effectively complement BMP activity to maximize biological efficiency while minimizing the BMP dose. One alternative approach is to deliver no BMP at all, while enhancing the ability of the progenitor cells that participate in regeneration to respond to endogenous BMPs. This can be accomplished by delivering inhibitors of BMP antagonists such as Noggin, thereby enhancing endogenous BMP activities. Noggin is a direct target of BMP pathways in osteoprogenitors, and it is thus highly likely that supraphysiological BMP doses are required clinically in large part due to Noggin induction. Thus, we propose an approach for enhancing BMP signaling through down-regulation of Noggin. The potency of endogenous BMPs can be enhanced by delivering osteoinductive signals that are more specific and less pleiotropic than BMPs, such as Nell-1 [Nel-like molecule-1; Nel (a protein strongly expressed in neural tissue encoding epidermal growth factor like domain)]. In previous studies, Nell-1 has been shown to accelerate osteogenic differentiation in vitro and calvarial bone formation in vivo. Moreover, Nell-1 is a secreted protein that can be delivered extracellularly, and most importantly Nell-1 promotes synergistic effects with BMP2 on bone regeneration. By suppressing Noggin locally, we seek to enhance endogenous BMP signaling which in turn, should synergistically stimulate osteoblast differentiation induced by Nell-1, thereby leading to maximum bone formation without the concerns surrounding BMP mediated adverse effects. The specific hypothesis of this proposal is that controlled delivery of Nell-1 combined with the employment of Noggin suppression can enhance repair of segmental femoral defects. Two specific aims are proposed to investigate this hypothesis. Aim 1: To enhance bone regeneration via Noggin suppression + Nell-1. In this specific aim, we will evaluate synergistic effects of Nell-1 combined with Noggin-suppressed MSC on osteogenic capacity and bone regeneration. Aim 2: To enhance bone regeneration via controlled delivery of Noggin-siRNA + Nell-1. In this aim, we will develop non-viral gene delivery/scaffolding systems that release Nell-1 and Noggin-siRNA and will test whether they can effectively regenerate bone in a segmental femoral defect model.